US stocks rise after Fed cuts rates

Last Updated: Thu, Oct 31, 2019 13:01 hrs
NYSE

New York: US stocks rallied on Wednesday after the Federal Reserve cut interest rates for a third time this year.

The Dow Jones Industrial Average jumped 115.27 points, or 0.43 per cent, to 27,186.69. The S&P 500 increased 9.88 points, or 0.33 per cent, to 3,046.77. The Nasdaq Composite Index gained 27.12 points, or 0.33 per cent, to 8,303.98, Xinhua reported.

Eight of the 11 primary S&P sectors closed higher, with utilities and health care up 0.87 per cent and 0.78 per cent, respectively, leading the advancers. Energy, however, dropped 2.12 per cent, becoming the worst-performing group.

US Federal Reserve on Wednesday lowered interest rates by 25 basis points amid a further slowdown in US economic growth.

The Federal Open Market Committee (FOMC), the Fed's rate-setting body, trimmed the target for the federal funds rate to a range of 1.5 per cent to 1.75 per cent after concluding its two-day policy meeting, largely in line with market expectation.

"Cutting interest rates is a stimulus package to the economy and the market, so investors love that," Peter Tuchman, an experienced trader on the floor of the New York Stock Exchange, told Xinhua.

The Fed's decision followed the release of the US economic growth data.

The US economy expanded at an annual rate of 1.9 per cent in the third quarter of the year, slightly lower than the 2-per cent growth rate in the second quarter, the Commerce Department reported on Wednesday.

The slower growth of the gross domestic product (GDP) in the third quarter reflected decelerations in personal consumption expenditures and government spending, and a larger decrease in nonresidential fixed investment, according to the department.

Wall Street also paid close attention to the corporate earnings.

Of the S&P 500 companies that have reported quarterly earnings by far, about 74 per cent have topped analysts' expectations, according to data from FactSet.